Studies were made to determine whether chronically administered, liposome-encapsulated doxorubicin would be less toxic than the free drug when given to beagle dogs according to a model system previously developed in this unit. Liposomal encapsulation of doxorubicin markedly decreased cardiac and other toxic effects elicited by free doxorubicin. Whether this advantage can be translated into antieffective antineoplastic therapy will need further evaluation.